Of course, NOG proudly showcases the company’s best features – its exploding revenue, its perfect drilling record, its heavy focus on the oil-soaked Bakken shale – in the pictures it paints when seeking to impress Wall Street. Meanwhile, throughout its recent rally, NOG has managed to escape the harsh public spotlight that burned it once but has since faded away and allowed fresh dirt to gather under the safe cover of dark.

Still, corporate filings reveal, those blemishes – the tainted company founders, the incestuous business arrangements, the fishy transfer agent, the sanctioned stock promoter, the relentless insider sales (which skyrocketed last week) – lurk just below the surface ready to grab the attention of curious bears or even distracted bulls who suddenly decide to open their eyes and take a careful look. Just one of those festering sores, let alone a combination of all of them and more, could prove damaging enough to leave permanent scars on NOG and its gorgeous stock price.

“We haven’t had any problems like that,” Harrington insisted last week, “unless you know something I don’t.”

After TheStreetSweeper offered to share the evidence it had gathered, however, Harrington quickly hung up the telephone. During that brief conversation, Harrington referred to TheStreetSweeper’s questions – covering everything from the size of his firm’s staff and clients to his professional track record – as “personal” and “offensive” and, other than denying past regulatory sanctions, never addressed any of them.

The SEC routinely asks transfer agents similar questions about their past conduct, however. Specifically, records show, the SEC asks if regulators have ever found the transfer agent or any “control affiliate” in violation of securities laws or restricted either one’s professional activities – both relevant issues in this case – for any reason.

Peter J. Henning, a law professor who formerly served as a senior attorney for the enforcement division of the SEC, warns of potentially serious consequences for those who supply misleading reports to federal regulators.

“If it came to the SEC’s attention, hopefully they would pursue at least an investigation if not an enforcement action,” says Henning, who worked as both a regulator and a prosecutor before assuming his current post as a law professor focused on white-collar crime at Wayne State University. “Those disclosure requirements are very important.”

Years ago, records show, the SEC cracked down on Ronald P. Harrington for allegedly concealing the true ownership of “free trading stock” held by insiders in nominee accounts and then sold into the public marketplace. Before that, records show, the SEC actually banned Harrington from serving as an accountant for any publicly traded company after he allegedly issued audit reports that violated generally accepted accounting practices.

Henning notes that most big companies hire brand-name firms, such as State Street or BNY Mellon, to serve as their transfer agents instead.

“For a company with a lot of shareholders, that’s a very important job,” explains Henning, who writes a popular column for the “White Collar Watch” section of The New York Times. “These are the owners (shareholders) of the company you are dealing with, and the last thing you want are shares out there that can’t be tracked …

“So a company should be careful and do its due diligence,” he adds, “because it has to be able to trust that its transfer agent is doing that job right.”

NOG failed to answer questions for this story.

The Founding Fathers

NOG’s non-executive founders (discreetly identified in an early corporate filing) look rather alarming, too. The first, Douglas M. Polinsky, previously served as CEO of a gambling-machine company that madeheadlinesyearsago because of its suspected ties to the Mob. (His father Jerrold Polinsky – portrayed as the secret force behind that company – later wound up in prison, the local St. Paul Pioneer-Pressreported, for convictions on fraud and bribery charges.) The second, Joseph A. Geraci II, worked as a broker until the National Association of Securities Dealer slapped him with its harshest sanction possible – a permanent ban from the industry – because of the “egregious nature” of his activities and its efforts to “protect the public interest” from any future transgressions down the road.

Since then, Reger and Gilbertson have gone on to pocket enormous stock-related gains. For the past year, records show, Reger and Gilbertson have sold stock like clockwork – cashing in hefty profits every single month -- in a frenetic selling spree that has delivereda combined$40 million-plus to their well-stuffed bank accounts. Reger executed his biggest sales by far during a three-day span last week, new corporate filings show, when he collected almost $23 million after dumping a full 20% of his previous stock holdings in the company he helped found.

Reger actually reported the third-largest open-market sale by any insider on Friday (the day after TheStreetSweeper sent NOG a list of detailed questions for this story), TheStreet.comrevealed, and the largest sale by a company executive – as opposed to a “beneficial owner” such as JP Morgan – by a landslide.

As NOG’s top executive, the insider arguably best equipped to foresee additional gains, Reger could have held onto that stock or even purchased more if he expected the price to keep on climbing higher. Like his sidekick Gilbertson, however, Reger has never joined outsiders in the recent buying frenzy. Instead, records indicate, Reger has rushed to capitalize on NOG’s breathless rally by dumping so much stock at such handsome prices that he recently managed to shatter his old records by scoring the equivalent of $1.17 million an hour – or almost $20,000 a minute – when the market was open for business to accommodate his transactions during last week's massive three-day selling spree.

The Rap Sheet

For years, research indicates, NOG has carried more weight than some penny-stock companies while largely escaping the forces of gravity that often hammer those shares.

Even Barron’s took a relatively light swing at NOG when covering the company’s two non-executive founders. It merely identified Polinsky as the past CEO of International Gaming Management (IGM), for example, and noted that the company specialized in distributing gambling machines before its stock was ultimately delisted. It then vaguely mentioned that Polinsky’s father wound up “charged with crimes,” which sent him to prison for several years, but never shared any of the sensational details – widelycoveredby thepress earlier – about IGM’s suspected ties to the Mob.

“Officials are investigating IGM because of its alleged links to New York’s Genovese crime family,” The Commercial Appealof Memphis reported in mid-1994. “A combined federal and state gambling task force raided the company’s offices (and) also searched homes of some IGM executives, including Douglas Polinsky, the former chief executive officer, and his father Jerrold Polinsky …

“IGM enriched the elder Polinsky and his alleged underworld ‘handler,’ Gary Danzo, an associate of the Genovese family, the search warrant affidavit states. (Moreover), the agents further accused the Polinskys of swindling shareholders in order to enrich themselves.”

The elder Polinsky was convicted of bribery in 1997, the Saint Paul Pioneer Press later reported, and then convicted again on fraud and tax evasion charges the following year. He was ordered to serve three years in prison on the first conviction, the newspaper said, and roughly twice that amount on the second. (He was never charged in a bigger gambling case that nailed several mobsters linked to an IGM supplier, the newspaper noted, and consistently denied any Mafia ties to the end.)

Polinsky and Geraci never responded to phone messages and email requests seeking input for this story.

The Magic Formula

NOG officially went public at $4 a share in the spring of 2007, records show, with the stock largely ignored – barely trading when it traded at all – for the next several months. The company then hired a tainted publicity firmto promote its stock, however, and soon enjoyed a jump in its share price and a corresponding burst in its trading volume.

NOG continued to pay WSR for “investor relations services” for the next two years, records show, with company insiders launching their current stock-selling spree along the way. In fact, according to a standard company profile featured on CNNMoney.com, NOG still relies on Kieft as its head of investor relations to this day.

Less than 24 hours earlier, TheStreetSweeper had contacted Nerhus by telephone and email seeking input for this story. He never responded to a detailed list of questions, however, and Kieft (sarcastically) dismissed a request for information as well.

Meanwhile, records show, WSR has snagged VOG – a newer version of NOG itself – as a paying client as well. Today, records show, WSR prominently showcases VOG in both the “Focus List” and the “aggressive growth portfolio” featured on the homepage of its website. WSR’s president now shows up as the head of investor relations for VOG, too.

For the most part, records show, WSR’s other clients trade for less than $1 – many for mere pennies – if in fact they continue to trade at all. As a result, both NOG and VOG jump out from that crowd.

TheStreetSweeper called VOG seeking information for this story. After TheStreetSweeper identified itself, however, the company’s CEO abruptly hung up the telephone.

The Insider Maze

NOG insiders have actually been accused of helping VOG – and essentially blamed for its success – by shortchanging investors in their own company.

A pending shareholder lawsuit, filed last year against insiders at both companies, spotlights a web of family connections and potential conflicts that reaches far beyond even those revealed in official corporatefilings. The players, as alleged in the complaint, include the following:

* Michael Reger, the founding CEO of NOG

* Michael Reger’s wife Brittany L. Reger, the manager of Reger Gas, a family-operated company (sharing NOG’s address) that owned 20% of Plains Energy Investments before it became VOG and controlled 1.73% of VOG’s stock even after that

* James Russell “J.R.” Reger, the CEO of VOG and the brother of NOG CEO Michael Reger

* James Randall Reger, the father of both Michael and J.R. Reger, the founding CEO of Plains Energy and the owner of more than 5% of VOG’s outstanding shares

* Ryan R. Gilbertson, an NOG co-founder and top company executive (current president, past CFO) and early investor in Plains Energy who, together with two affiliated firms -- Crystal Bay Capital Consulting and Wayzata Energy Capital – owned a combined 19% stake in Plains Energy before it became VOG and (through Wayzata) retained a stake in VOG itself

* Weldon W. Gilbertson, the father of NOG President Ryan Gilbertson, the original founding president (and 1.8% owner) of Plains Energy and an ongoing shareholder in VOG as well

* Chad D. Winter, the current CFO (and past vice president) of NOG and the founder of another investment firm -- Wayzata Bay Capital – with an early stake in Plains Energy that led to ownership of VOG shares

* Douglas M. Polinsky, a co-founder and former director of NOG and the president of Great North Capital Consultants, yet another early investor in Plains Energy that retained a stake in VOG itself

* Joseph A. Geraci II, also a co-founder and former director of NOG and the manager of Mill City Ventures, which (like Polinksy’s firm) took an early stake in Plains Energy and wound up with stock in VOG as a result

The lawsuit basically claims that NOG executives, “aided and abetted” by their fellow co-founders and insiders at VOG, hurt the company through a conflicted deal that created a new competitor (with an identical business model) that could essentially capitalize on opportunities that NOG should have pursued itself. Even if that lawsuit fades away, with both NOGand VOG seeking to dismiss it in court, the complaint has already showcased a maze of troubling conflicts – and the continued involvement of NOG’s tainted non-executive founders – for the entire world to see.

For example, records show, the pair teamed up to launch a new gambling company – Poker Magic (OTC: POKR.OB) – the year before NOG hit the market. They actually assumed leadership roles in this particular case, records show, with Polinsky still serving as CEO and Geraci as CFO of the obscure poker company to this day. POKR has never traded above the $1 mark (and often fails to trade at all), records indicate, peaking last month at 90 cents before quickly plummeting to its current price of just 30 cents a share.

Today, recordsshow, NOG and POKR actually share the same neighborhood – their corporate offices separated by a mere one-minute drive – despite the vastdifferences in their market value and available resources. Of course, as documented above, NOG still looks like a penny-stock company in many telling ways. NOG never really outgrew the traits that defined it at birth, research indicates, even if the company’s share price suggests that it did.

To some, Reger now looks like a fortune-teller who saw the light before the market even opened its eyes. To others, however, he looks like a false prophet whose blinding faith – and bright forecast -- could come back to haunt him in the end.

“I talk to my investors and say, ‘Help me figure out a way I could screw this up,’” he concluded. “Because I can’t see one.”

* Important Disclosure: Prior to the publication of this article, TheStreetSweeper (through its members) has effected a “short sale” of 53,000 shares of the stock of NOG beginning on March, 17, 2011, at an average price of $28.7889 a share, with the intent of profiting from decreases in the price of the stock. (This represents an increase from the 50,000 shares sold short at an average price of $28.7536 a share disclosed at the end of TheStreetSweeper's first NOG story on March 21.) TheStreetSweeper covered 20,000 shares of its short position at $28.64 on March 22; it covered the remaining 33,000 shares at $26.435 on March 23. TheStreetSweeper may choose to take additional positions in the stock going forward and will fully disclose the details of those trades if and when they occur.

Update: TheStreetSweeper began establishing a new short position in NOG on April 22. It has sold a total of 13,471 shares of NOG short, at an average price of $24.60 a share, since that time. It covered that position at $23.5025 a share.

New Update: TheStreetSweeper established another new short position in NOG on May 9, when it sold a total of 38,500 shares short at $21.23 a share. It covered 18,900 shares at $20.25 a share on May 12 and the remaining 19,600 shares at $19.95 on May 16. TheStreetSweeper may choose to establish a new short position in NOG and will fully disclose the details of that investment if and when it occurs.

New Update: TheStreetSweeper began establishing a new short position in NOG on Aug. 30, when it sold 2,000 shares of the company's stock short at $20.90 a share. It covered that position on Sept. 2 at $19.22 a share. TheStreetSweeper sold 3,000 shares of NOG stock short on Sept. 8 at $20.35 a share and then covered that position by repurchasing the stock on Sept. 9 at $19.21 a share. It established a new short position in NOG on Sept. 13, when it sold 2,000 shares of the company's stock short at $20.74 a share. TheStreetSweeper may choose to adjust the size of this position going forward and will fully disclose the details of any future transactions as they occur.

New Update: TheStreetSweeper established a new short position in NOG on Dec. 26, when it sold 4,000 shares of the company's stock short at $24.40 a share. It covered that position on Dec. 27 at $23.89 a share. It then established another short position in NOG on Jan. 3, selling 8,100 shares at $24.86 a share. It shorted an additional 4,500 shares on Jan. 4 at $25.33 a share and has now sold a total of 12,600 shares of NOG short at an average price of $25.03 a share. TheStreetSweeper covered 4,500 of those shares on Jan. 5 at $24.81 a share, reducing its short position to 8,100 shares at this time. It covered the remaining 8,100 shares on Jan. 6 at $24.79 and no long has a position in the stock.

* New Update: TheStreetSweeper established a new short position in NOG on Jan. 10, when it sold 6,400 shares of the company's stock short at $25.39 a share. It covered all 6,400 shares on Jan. 12 at $24.58 a share and no longer has a position in the stock at this time.

As a matter of policy, Melissa Davis – the editor of this website and the author of this story – will never take a financial position (short or long) in any of the stocks that she covers. To contact Ms. Davis, please send an email to editor@thestreetsweeper.org.